WASHINGTON—Thomas Perez, a Justice Department official nominated Monday as labor secretary, is coming under scrutiny for a deal he helped broker with the city of St. Paul, Minn., a matter that's likely to get high billing at his confirmation proceedings.

Documents reviewed by The Wall Street Journal show Mr. Perez worked to secure a deal in which St. Paul agreed to drop a Supreme Court case that threatened an enforcement tactic used by the department in housing-discrimination cases. In exchange, the Justice Department...